Hospitality Benchmark 2013

travel, leisure & tourism Hospitality Benchmark 2013 Figures make it clear! kpmg.nl Jos Sweers Ilse de Graaff

Contents Foreword 1 About the authors 2 Introduction 3 Methodology 4 1 Market indicators 6 1.1 Key ratios 6 1.2 Market segmentation 8 1.3 Ownership structure 12 1.4 Personnel 15 2 Benchmark analysis 18 2.1 Benchmark analysis from 2012/2011/2010 18 3 Outlook for 2013-2015 24 3.1 Market developments 24 3.2 Financing and refinancing 25 3.3 Loyalty programmes 26 Explanation of terms used 29 About KPMG in the Netherlands 30 b KPMG, 7/2011 Amstelveen, august 2013

Foreword For the ninth consecutive year, KPMG s Travel, Leisure & Tourism Group presents its annual Hospitality Benchmark. We would sincerely like to thank all the 220 participating hotels for their contributions that have once more enabled the Hospitality Benchmark to be created. This report will allow you to compare the results of your own organisation with the recorded benchmarks for the Netherlands as a whole, the Amsterdam and Schiphol region, and the rest of the country. In addition, the report provides insight into market developments and we present you with our vision of the market in the coming three years. We hope that you will enjoy this report and trust that our study will help you develop your own vision regarding the hospitality market. If you would like to exchange ideas about the vision behind the figures or any of the other topics in this report, you will find a professional partner in KPMG. Jos Sweers Travel, Leisure & Tourism Segment Leader KPMG Accountants N.V. sweers.jos@kpmg.nl Ilse de Graaff Travel, Leisure & Tourism Senior Manager KPMG Accountants N.V. degraaff.ilse@kpmg.nl Hospitality Benchmark 2013 1

About the authors Jos Sweers and Ilse de Graaff have been working as accountants in KPMG s Travel, Leisure & Tourism Group a number of years. Jos heads a multi-disciplinary team that besides audits of financial statements, handles audit-related engagements and advisory engagements relating to strategic and tactical issues, such as financing issues, mergers and acquisitions, centralisation, outsourcing, feasibility studies and distribution management. Jos and Ilse share a passion for the hotel industry. Each year, together with their team, they publish the KPMG Hospitality Benchmark report. This report includes a benchmark for hotel revenue and cost patterns. In addition, the authors outline their vision with respect to developments in the hotel market. Both their activities and this report are consistent with the core activity of the Travel, Leisure & Tourism Group: reinforcing and sharing KPMG s knowledge of the hospitality sector. About the authors Introduction

Introduction As in previous years, our 2013 study of the hotel sector was conducted in the second quarter of the year. Many hotels have again participated in the study this year. We greatly appreciate your contribution to our research! A comprehensive and reliable benchmark helps hotels form a picture of their position in the market in these difficult economic times. We continue to provide this sector report free of charge. This KPMG Hospitality Benchmark report consists of three parts: 1 Market indicators 2 Benchmark analysis 3 Outlook for 2013-2015 The first part of the report provides insight into the development of the key ratios used to manage organisations. Segmentation at various levels, such as star rating, location, room size and price band, will help you compare your organisation with other organisations in the sector. The second part of the Hospitality Benchmark report consists of the benchmark analysis, which allows you to compare your profit and loss account to that of other hotels in the market. The profit and loss account is presented as a percentage of total sales revenue. The various segmentation levels allow you to reliably assess your hotel s development. In addition, the benchmark enables you to test and, where necessary, improve your budgeting process. In the final part of the report, we present our outlook for 2013-2015. Based on our extensive experience in the hotel market, we use this report to share our vision regarding the future of the sector. The development of the market is the recurring theme. This year, we also include information on the anticipated future impact of financing, re-financing and loyalty programmes. Hospitality Benchmark 2013 3

Methodology Each year, KPMG s Travel, Leisure & Tourism Group conducts a large-scale benchmark study in the Dutch hospitality market. The report is created by means of a quantitative study. A structured questionnaire makes it possible to compare the figures with previous years and thus ensure their validity. The data have not been audited. Approximately 1,580 hotels in the three-, four- and five-star hotel segment are registered with the Chamber of Commerce in the Netherlands. We then approached approximately 1,000 three-, four- and five-star hotels in the Netherlands with 20 or more rooms. Of those, 22% completed and returned the survey. First we classify the information obtained by size of the respective hotel organisations. Breakdown of participants Number of hotels Number of rooms Average number of rooms per hotel 2012 2011 2012 2011 2010 2012 2011 2010 Total 220 282 25.283 28.856 16.011 115 102 87 Province Groningen, Friesland and Drenthe 16 23 1.004 1.583 883 63 69 63 Overijssel 12 15 941 1.100 690 78 73 86 Gelderland 30 28 2.339 1.973 1.780 78 70 66 Utrecht and Flevoland 19 18 1.860 1.496 1.009 98 83 72 Noord-Holland 57 83 10.386 12.414 4.350 182 150 114 Zuid-Holland 32 45 4.387 5.014 4.050 137 111 127 Zeeland 8 9 459 604 790 57 67 72 Noord-Brabant 21 29 2.144 2.683 1.358 102 93 68 Limburg 25 32 1.763 1.989 1.101 71 62 55 Size < 50 rooms 47 82 1.662 2.708 2.244 35 33 33 50-100 rooms 87 109 6.492 8.216 4.858 75 75 76 101-150 roms 40 42 4.945 5.227 4.035 124 124 119 > 150 roms 46 49 12.184 12.705 4.874 265 259 271 Location Amsterdam + Schiphol 52 60 9.860 10.111 4.275 190 169 122 Other 168 222 15.423 18.745 11.736 92 84 79 Star rating Three stars 57 99 5.524 7.049 4.353 97 71 59 Four stars 153 170 18.101 20.035 10.247 118 118 104 Five stars 10 13 1.658 1.772 1.411 166 136 128 Price band < 65 42 61 4.082 5.095 3.383 97 84 83 65-80 65 81 6.798 6.462 3.795 105 80 68 81-105 70 82 8.489 7.963 5.791 121 97 97 > 105 43 58 5.914 9.336 3.042 138 161 113 4 Methodology

The response rate of 22% represents approximately 26% of the capacity (based on the room count) of the accommodation-providing businesses in the three-, four- and five-star market segment. Together, the 220 hotels that participated account for 25,283 rooms. The market for hotels with a star rating has a total capacity of approximately 108,500 rooms. Approximately 98,000 of these rooms are in the three-, fourand five-star market segment. Noord-Holland, with a share of over 26% of participating hotels, is the largest participating province. Compared to last year, a decline can be seen in the number of participating hotels. Nevertheless, there is a balanced distribution across the provinces. The adjacent table shows the sample classified by management form and property management. It is important to note that it is not our intention to draw conclusions regarding the entire population of accommodationproviding businesses. Instead, we aim to provide guidance for interpreting trends in the hotel sector. Respondents by property management (%) Ownership Lease 44 56 Hospitality Benchmark 2013 5

1 Market indicators 1.1 Key ratios The key ratios for hotel organisations (occupancy rate, average room rate, revenue per available room (RevPAR) and total revenue per room) are shown in the accompanying table, segmented by region, room size, star rating and price band. In the current downturn caused by the recession, the hotel sector remains hopeful for a recovery in the market. We saw no clear signs of market recovery in 2012, with the year being very similar to 2011. Thus, the room rates nationwide rose marginally from EUR 90 to EUR 92, the occupancy rate fell marginally by 0.7 percentage points to 64.5%.this results in a stabilized RevPAR of EUR 60. However, total revenue per room in 2012 increased slightly by 4.7% to EUR 41,572 per room. We do not see the stabilisation in occupancy rate, room rate and RevPAR reflected in all regions. In part of the hotel sector, a decrease in the key ratios has continued unabated since 2008. The main losers in 2012 were Utrecht and Flevoland with considerable downturns. Both a decrease in occupancy rate and a decrease in average room rate meant that there was a substantial decrease in RevPAR. The occupancy rate declined slightly in the region by 6.4 percentage points to 57.9% and the average room rate also fell slightly by EUR 3 to EUR 75 in 2012. The RevPAR declined from EUR 50 in 2011 to EUR 44 in 2012. The hotels in Noord-Brabant and Zeeland also experienced a downturn in the RevPAR with a marked decline of 7.7% and 8.0% respectively. The province of Noord-Holland, which historically always shows all the best figures, had a good year in 2012. The hotels here saw the occupancy grow marginally to 75.1%. The average room rate rose slightly to EUR 122, resulting in the RevPAR increasing by 6.8% to EUR 91 in 2012 compared to EUR 86 in 2011. What is unusual here is that this growth seems mainly to have been achieved in the province itself. The occupation rate in the Amsterdam-Schiphol region actually decreased by 1.4 percentage points to 76.3%. Because the room rate in this region only increased minimally, the RevPAR decreased slightly by 2% to EUR 95. However, the hotels in the capital city with an average room rate of EUR 126 a night remain more expensive than the hotels in the rest of the country. Despite the hopeful improvement expected in 2011, it appears that there has not yet been a full recovery in Amsterdam, partly due to the large number of new hotels. Since the first signs of recovery are usually seen in the Randstad region [the Western Netherlands conurbation], we currently do not yet expect any market recovery. It was also noticeable in 2012 that especially small hotels (less than 50 rooms) performed well. This group of hotels showed an increase in RevPAR of 14% to EUR 60. The originality and personal service, which is often associated with boutique hotels, are appreciated by the guests. This is consistent with the trend that experience and having a unique concept is becoming increasingly more important in the hotel industry. Tables 1.1.2 and 1.1.3 provide a detailed overview of the occupancy rate and the average room rate in 2010, 2011, and 2012. What is suprising in these tables is the decline in the average room rate of the three-star hotels in the Amsterdam/ Schiphol region and the increase in average room rate of the five-star hotels. The average room rate at the three-star segment in the Amsterdam/Schiphol region has clearly decreased from EUR 96 in 2011 to EUR 89 in 2012, a decrease of 7%. In the rest of the country, the average room rate has remained fairly 6 1 Market indicators

Table 1.1.1: Market indicators Occupancy rate % Average room rate ( ) RevPAR ( ) Total revenue per room ( ) 2012 2011 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010 Total 64,5 65,2 63,6 92 90 87 60 59 55 41.572 39.694 46.374 Province Groningen, Friesland and 58,2 59,3 59,8 81 78 73 46 46 43 41.690 39.870 42.815 Drenthe Overijssel 63,7 54,4 61,2 74 79 68 46 43 42 41.997 35.005 48.785 Gelderland 58,0 60,7 60,1 70 70 73 41 43 44 41.508 44.530 49.477 Utrecht and Flevoland 57,9 64,3 63,6 75 78 76 44 50 48 31.302 39.822 66.825 Noord-Holland 75,1 74,2 73,1 122 115 114 91 86 83 49.058 45.316 50.990 Zuid-Holland 64,7 63,9 61,6 91 87 91 58 56 56 45.128 46.702 46.482 Zeeland 63,8 63,1 64,1 76 81 83 47 51 53 28.467 25.329 26.159 Noord-Brabant 58,8 62,2 60,1 74 77 78 44 48 47 27.989 29.684 32.610 Limburg 62,1 60,9 59,9 83 79 88 51 48 53 48.263 31.589 45.220 Size < 50 rooms 63,0 62,9 61,2 93 83 87 60 52 55 46.753 42.957 43.002 50-100 rooms 63,1 64,7 65,5 83 85 83 53 55 55 42.548 38.221 51.341 101-150 rooms 64,9 64,8 63,2 93 92 86 61 60 55 38.128 36.879 43.302 > 150 rooms 68,4 70,9 65,6 105 110 103 73 78 67 49.503 41.646 44.466 Location Amsterdam + Schiphol 76,3 77,7 73,1 126 125 123 95 97 90 51.705 50.549 56.815 Other 60,8 61,9 61,5 81 80 79 49 49 49 38.503 36.152 43.993 Star rating Three stars 65,1 64,8 60,2 76 76 67 51 49 40 26.235 28.935 40.441 Four stars 64,3 65,7 66,2 88 88 91 58 58 61 42.565 39.033 44.057 Five stars 63,6 63,1 62,3 234 216 189 151 136 117 114.293 95.248 89.649 Price band < 65 60,0 61,5 61,7 56 54 54 34 33 34 26.840 27.419 39.416 65-80 61,0 62,8 60,5 74 72 72 45 45 43 34.995 29.989 36.802 81-105 66,9 66,3 67,0 92 93 92 62 61 62 43.070 39.047 47.004 > 105 70,2 71,3 64,8 153 149 157 106 106 102 65.061 61.688 68.392 Hospitality Benchmark 2013 7

Table 1.1.2: Occupancy rate Occupancy rate (%) 2012 2011 2010 Three stars Four stars Five stars Total Three stars Total 65,1 64,3 63,6 64,5 64,8 65,7 63,1 65,2 60,2 66,2 62,3 63,6 Location Amsterdam + Schiphol 78,4 77,0 66,8 76,3 80,5 78,3 67,7 77,7 61,9 77,5 71,2 73,1 Other 59,2 61,4 58,9 60,8 60,8 62,7 55,6 61,9 60,0 63,2 55,0 61,5 Four stars Five stars Total Three stars Four stars Five stars Total Table 1.1.3: Average roomrate Average roomrate ( ) 2012 2011 2010 Three stars Four stars Five stars Total Three stars Total 76 88 234 92 76 88 216 90 67 91 189 87 Location Amsterdam + Schiphol 89 113 297 126 96 110 274 125 71 113 238 123 Other 70 82 140 81 71 83 122 80 67 85 148 79 Four stars Five stars Total Three stars Four stars Five stars Total stable compared to 2011. One reason for this may lie in the increasing number of hotels in the Amsterdam region. In accordance with the 2007-2010 hotel policy, the municipality of Amsterdam wants to increase the number of hotel rooms by 9,000 up to the end of 2015. The room rates of five-star hotels rose in 2012 by 8.5% to EUR 234. This increase seems to contradict the current economic downturn, in which we would expect a decline in the price of the luxury segment. As mentioned previously, experience and service play an increasingly more important role. The five-star hotels are appear to be able to respond to this demand. In addition, the guest lists of the five-star hotels tend to be more international, and there is still a group of guests who are less affected by the recession and willing to pay for the service and luxury of a five-star hotel. 1.2 Market segmentation Traditionally, market segmentation in the hotel industry is based on various guest profiles, the main profiles being business and leisure. The table on this page provides insight into market segmentation in from 2010 to 2012. To gain insight into the development of the booking behaviour, pages 10 and 11 show a market segmentation across the following distribution channels: Walk-ins Direct contact (email and telephone) Own website Own reservations system Online third party Tour operator/travel agent Auction sites On pages 10 and 11, you will also find a breakdown into the origin of the guest lists. Business/leisure Table 1.2.1 shows that the business segment decreased in 2012 compared to the leisure segment. We notice in particular a shift from business individual to leisure individual. This is in line with 8 1 Market indicators

Table 1.2.1: Marktsegmentatie Business individual Business group Leisure individual Leisure group 2012 2011 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010 Total 30 35 35 16 16 17 45 39 38 9 10 11 Province Groningen, Friesland and 32 32 45 21 17 8 38 45 38 9 6 9 Drenthe Overijssel 21 21 19 13 14 8 41 46 41 25 19 32 Gelderland 25 28 27 21 26 22 44 37 41 11 9 11 Utrecht and Flevoland 34 47 49 30 17 25 27 25 17 9 11 9 Noord-Holland 33 31 29 10 14 18 50 44 41 7 11 12 Zuid-Holland 36 41 39 20 21 23 38 28 31 7 10 7 Zeeland 13 22 18 7 9 12 72 63 64 9 6 7 Noord-Brabant 63 55 57 9 11 14 25 26 22 2 8 8 Limburg 20 27 23 14 13 12 55 48 52 11 12 13 Star rating Three stars 32 37 38 13 13 14 43 38 36 12 12 12 Four stars 29 34 32 18 17 19 45 39 39 8 10 10 Five stars 37 30 31 15 27 19 46 36 43 2 7 8 our expectations, more and more companies are economizing on hotel stays of personnel. Area of origin Table 1.2.2. provides insight into guests area of origin. Domestic guests remain the main buyers of hotel stays, followed by the Western European guests and Americans in third place. increase of 15%. This seems to be mainly at the expense of direct contact with the hotel and bookings via its own website. The increase has mainly occurred in the four-star and five-star segment and we expect that this increase will continue during the coming years. Market segmentation by distribution channels In 2012, in line with our expectations, we see a continued increase in the share of online third parties and auction sites. Last year, 33.8% of bookings were made through these parties, an Hospitality Benchmark 2013 9

Table 1.2.2: Market segmentation by area of origin Area of origin Netherlands Western Europe (including UK) Eastern Europe (including Russia) 2012 2011 2010 2012 2011 2010 2012 2011 2010 Total 56,0 56,2 57,8 28,9 26,2 26,3 4,4 5,2 4,2 Province Groningen, Friesland and Drenthe 76,7 74,4 76,3 16,7 17,9 18,8 2,5 2,4 1,8 Overijssel 83,8 69,3 84,6 10,2 20,8 11,2 3,4 4,4 1,6 Gelderland 73,3 76,5 74,9 15,8 12,2 15,5 2,5 3,7 2,5 Utrecht and Flevoland 67,0 63,6 59,1 23,5 16,8 24,6 3,2 11,4 3,3 Noord-Holland 20,3 31,0 28,5 49,0 38,1 39,6 7,4 6,6 7,3 Zuid-Holland 51,7 55,8 55,3 35,1 26,4 27,0 2,8 5,9 3,7 Zeeland 49,2 52,0 48,2 45,2 45,0 41,0 1,8 0,7 6,1 Noord-Brabant 58,0 55,0 57,3 24,0 25,1 26,4 10,4 6,9 4,3 Limburg 63,6 70,8 72,2 23,5 20,5 18,9 4,6 2,6 3,4 Star rating Three stars 48,6 54,5 60,5 31,5 27,6 26,8 6,4 5,6 4,7 Four stars 59,9 58,8 57,4 28,4 25,2 25,4 3,6 4,9 3,8 Five stars 56,7 40,5 45,8 24,5 28,5 30,5 3,5 5,1 4,4 Location Amsterdam + Schiphol 18,3 26,6 26,7 49,9 37,5 38,7 7,6 7,5 7,4 Other 65,5 63,6 64,4 23,7 23,4 23,6 3,6 4,6 3,5 Table 1.2.3: Market segmentation by distribution channel Distribution channel Walk-ins Direct contact Own website 2012 2011 2010 2012 2011 2010 2012 2011 2010 Total 4,9 4,9 4,2 32,4 34,3 37,6 11,9 15,0 15,4 Province Groningen, Friesland and Drenthe 2,4 3,6 4,8 47,6 44,4 43,6 12,3 15,7 11,8 Overijssel 1,8 3,1 4,6 41,0 39,2 62,8 18,5 21,6 7,8 Gelderland 4,0 2,7 2,7 22,2 36,5 42,0 18,0 20,8 18,1 Utrecht and Flevoland 0,8 2,7 3,0 30,3 44,7 31,6 16,0 18,5 25,3 Noord-Holland 3,4 7,0 4,3 28,0 25,8 21,7 9,4 13,8 15,9 Zuid-Holland 11,0 4,1 3,8 31,8 34,9 39,7 13,9 11,2 12,8 Zeeland 7,3 2,5 6,8 36,3 32,4 38,2 11,5 14,9 13,0 Noord-Brabant 5,3 4,4 3,7 43,0 35,7 47,9 10,1 12,1 16,0 Limburg 6,3 6,6 5,2 32,0 35,6 34,6 13,8 11,7 16,2 Star rating Three stars 4,9 5,1 5,0 30,9 33,1 40,4 10,7 14,8 14,6 Four stars 3,3 4,3 3,8 33,9 34,2 36,0 12,4 15,4 16,1 Five stars 18,5 10,3 1,9 27,2 39,6 34,9 13,5 12,7 15,5 10 1 Market indicators

Asia United States Africa / Middle East Canada / Australia 2012 2011 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010 2,8 4,3 3,2 5,2 5,2 5,6 1,1 1,5 1,4 1,5 1,4 1,5 1,4 1,5 0,9 1,6 2,0 1,7 0,3 0,9 0,2 0,8 0,9 0,3 0,5 3,3 0,8 2,0 1,1 1,4 0,1 0,8 0,2 0,1 0,3 0,2 2,6 4,0 2,5 3,2 2,5 2,6 1,2 0,6 1,2 1,4 0,5 0,8 2,3 3,8 5,1 2,6 2,8 3,9 1,0 1,2 2,9 0,4 0,4 1,1 4,6 7,2 5,6 13,3 11,7 12,9 2,2 2,6 2,3 3,1 2,8 3,8 3,6 4,4 4,4 5,0 3,9 6,7 1,1 1,9 1,7 0,7 1,7 1,2 0,7 0,7 0,8 1,5 0,9 2,4 0,5 0,5 1,2 1,2 0,2 0,3 3,1 5,1 3,1 1,9 5,0 5,5 1,3 1,6 1,6 1,3 1,3 1,8 2,2 2,0 1,8 3,9 2,6 2,8 0,6 0,8 0,5 1,6 0,7 0,4 4,5 5,0 2,4 5,8 4,2 3,4 1,5 1,4 1,2 2,6 1,8 1,0 2,2 3,7 3,5 4,2 4,9 6,6 1,0 1,4 1,6 1,0 1,1 1,7 1,9 6,0 5,6 11,2 16,2 10,8 1,1 2,2 1,2 1,2 1,5 2,0 4,7 8,2 6,2 14,0 13,9 14,8 2,3 2,8 2,0 3,2 3,5 4,2 2,3 3,3 2,6 3,0 3,1 3,7 0,8 1,1 1,3 1,0 0,9 0,9 Own reservation system Online third-party Tour operator / travel agent Auction sites 2012 2011 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010 9,9 9,3 9,0 28,9 26,4 23,9 7,1 7,2 7,4 4,9 2,9 2,5 6,3 11,5 10,2 24,1 17,4 24,5 4,1 3,6 3,9 3,2 3,8 1,2 8,1 7,6 3,0 21,8 18,3 13,8 3,8 5,5 3,6 5,0 4,7 4,4 7,8 8,3 9,2 26,4 22,3 20,5 10,5 4,8 5,4 11,1 4,6 2,1 15,3 6,1 21,1 24,2 20,2 15,7 6,8 5,3 2,6 6,7 2,5 0,7 10,9 10,7 8,8 37,4 31,1 30,5 10,2 9,9 15,8 0,7 1,7 3,0 6,4 8,5 12,1 22,9 29,0 22,8 6,6 7,5 7,3 7,5 4,8 1,5 16,0 9,8 4,7 23,2 27,1 29,2 4,5 11,4 6,1 1,2 1,9 2,0 6,7 12,6 8,2 26,3 27,5 19,5 3,7 5,9 3,2 4,9 1,8 1,5 5,1 8,7 4,5 34,4 28,7 26,9 5,7 6,7 7,5 2,6 2,0 5,0 10,2 6,4 7,9 33,1 28,9 22,5 7,6 8,7 5,5 2,6 3,0 4,1 10,6 11,7 10,1 26,1 25,1 24,7 7,2 6,2 8,0 6,5 3,1 1,3 3,0 5,7 7,5 31,3 23,5 26,1 4,0 7,9 13,7 2,5 0,3 0,4 Hospitality Benchmark 2013 11

1.3 Ownership structure Within the hotel industry, we make a distinction between various forms of ownership structure/management forms. In our study, we distinguish between: independent operator without franchise formula (standalone hotel); independent operator with franchise formula; under management of an (international) chain (management contract); part of a chain of private hotels (property and operation using a chain). During the past three years we have noticed a significant increase in the number of participating hotels under management of an (international) chain and a decrease in the percentage of stand-alone hotels (Table 1.3.0). This means that more and more hotels join a chain, with which they can make use of the reputation of a hotel brand and an associated reservation system. It is also possible to achieve savings on personnel costs by centra lising certain functions. Our study also revealed that 62% of the hoteliers believe that it will be increasingly difficult for an individual hotel to survive without affiliating with a renowned hotel brand. Table 1.3.0 Forms of exploitation 60 50 40 30 Managed by an international chain Stand alone hotels Part of a chain of own hotels Franchised hotels 20 10 0 2012 2011 2010 12 1 Market indicators

Hospitality Benchmark 2013 13

14 1 Market indicators

1.4 Personnel Personnel analysis A large share of the revenue of hotels (on average about 35%) is spent on personnel costs. To improve a hotel s result, it is therefore important to keep these cost items under control, however not at the expense of the staff. This section focuses on personnel and includes various personnel analyses, which are segmented by number of rooms and star rating. At the total level, the number of FTEs decreased in 2012, a trend that began in 2008. The decrease in the number of FTEs in 2012 was the strongest in the five-star hotels (> 150 rooms) and in the Rooms and F&B depart ments. This is a direct result of outsourcing (Table 1.3.5) the room staff, a trend that has been evident for several years already. In 2012, 74% of the hoteliers stated that house keeping was outsourced, compared to 62% in 2011. We also see in practice that there are increasing numbers of zero-hour contracts used, and that chain hotels deploy their staff more efficiently across several hotels. The percentage of personnel costs at the five-star hotels therefore has also decreased from 34% to 33%, despite the collective labour agreement (cao) pay increase in the last quarter of 2012. The result is that the total revenue per employee at the five-star hotels increased significantly in 2012. This increased pro- Table 1.4.1: Personnel analysis by number of rooms Number of rooms < 50 51-100 101-150 > 150 Total Department 2012 2011 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010 Afdeling Administrative & General (including HR) 1,6 1,9 1,7 2,0 2,9 2,4 2,7 2,7 3,0 4,0 5,0 7,3 2,5 2,8 3,1 Rooms 6,1 4,9 4,2 10,5 9,6 8,6 12,3 12,0 13,8 18,8 29,8 31,2 12,0 9,9 10,1 F&B 7,0 8,5 7,4 15,2 15,9 16,2 15,3 17,4 25,1 25,5 30,7 33,6 16,2 18,1 15,5 Sales & Marketing 1,0 0,9 0,6 1,2 1,4 1,5 1,6 2,2 1,9 3,0 8,1 3,1 1,7 2,0 1,9 Property management & 1,1 0,7 0,5 1,7 1,2 1,1 1,6 1,9 1,8 1,9 4,4 5,8 1,6 1,5 1,5 Maintenance Other departments 0,5 1,6 1,4 2,3 2,3 2,0 2,9 4,2 2,1 3,1 7,4 1,8 2,3 3,0 2,4 Total 17,3 18,5 15,8 33,0 33,3 31,8 36,4 40,4 47,7 56,2 85,4 82,8 36,3 37,3 34,4 Table 1.4.2: Personnel analysis by star rating Number of stars Three stars Four stars Five stars Total Total 2012 2011 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010 Department Administrative & General (incl. HR) 0,8 1,6 1,9 2,9 3,1 3,4 3,9 4,8 7,7 2,5 2,8 3,1 Rooms 7,0 4,2 5,3 12,8 11,5 12,3 24,7 24,6 21,2 12,0 9,9 10,1 F&B 8,7 7,5 10,4 17,7 16,5 20,2 29,8 37,3 55,1 16,2 18,1 15,5 Sales & Marketing 0,9 0,7 0,7 1,8 2,2 2,3 2,7 6,2 5,4 1,7 2,0 1,9 Property management & Maintenance 0,9 0,6 0,8 1,8 1,8 1,7 2,2 4,5 3,5 1,6 1,5 1,5 Other departments 1,6 1,5 1,8 2,5 3,3 2,7 3,3 7,0 3,2 2,3 3,0 2,4 Total 19,9 16,1 21,0 39,5 38,4 42,6 66,6 84,4 96,1 36,3 37,3 34,4 Hospitality Benchmark 2013 15

Table 1.4.3: Average payroll costs per FTE (full-time equivalent) (in ) Administrative & HR Rooms F&B Sales & Marketing Property management & Maintenance Total 2012 2011 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010 Total 59.709 62.480 61.430 44.930 39.281 45.085 42.147 35.672 37.050 44.500 41.847 37.614 35.494 39.238 36.325 43.252 43.392 42.184 Table 1.4.4: Revenue per FTE (full-time equivalent) (in ) Total revenue per employee Total room revenue per room employee Total revenue from F&B per F&B employee 2012 2011 2010 2012 2011 2010 2012 2011 2010 Total 118.535 116.058 112.941 194.628 187.256 178.539 103.298 93.003 87.101 Star rating Three stars 113.205 114.804 114.483 164.258 159.857 156.939 86.890 77.665 93.178 Four stars 118.643 116.351 112.634 189.523 190.583 188.313 107.464 95.131 82.006 Five stars 172.120 116.110 106.879 281.797 219.824 204.353 112.485 105.078 88.714 16 1 Market indicators

ductivity is reflected in the absenteeism in the five-star hotels; see Tables 1.3.6 and 1.3.7. Here we see an increase of 3.5% to 4.1%, an increase of 17.1%. We wonder how much space is left for further cuts in personnel costs? Average payroll costs per FTE The average total payroll costs per FTE remained stable in 2012. However we notice differences between departments. For example, take the average payroll costs for the Administration and HR department decreased by 4.4%. This is consistent with our expectation that administrative personnel will decrease due to the previously identified centralization of functions by chain hotels. Administration and HR lend themselves perfectly for this. The average payroll costs per FTE for the Sales and Marketing department continued to increase this year. This is a logical development from a greater focus on increasing sales revenue, which has led to additional sales activities. Revenue per FTE Looking at the total revenue per FTE, it appears that hotels have improved their efficiency. The slight increase in RevPAR and a decrease in the total number of employees have resulted in the total revenue per employee increasing. The hotels also saw the total revenue from F & B per F & B employee increase in 2012. The reasons for this are partly a reduction in the workforce and the associated decrease in personnel costs. Absenteeism Absenteeism has decreased across the board by 9.4% compared to 2011. The largest decrease was observed in the medium-sized hotels (50-100 rooms), which saw its absenteeism fall by 23% in the segment. One reason for this may be the increase in the outsourcing of services. We observed a stabilisation in the decline of the absenteeism rate in the smaller hotels (<50 rooms) and the large hotels (101 150 rooms). Absenteeism per star rating shows that absenteeism at the five-star hotels is the highest with 4.1% and an increase compared to last year by 17.1%. As stated previously, this could be associated with the increased workload at the five-star hotels. Table 1.4.5: Outsourcing (in %) No Outsourcing outsourcing 2012 2011 2012 2011 Star rating 26% 38% 74% 62% Three stars 27% 57% 73% 43% Four stars 25% 36% 75% 64% Five stars 25% 20% 75% 80% Size 25% 37% 75% 63% < 50 41% 67% 59% 33% 50-100 21% 29% 79% 71% 101-150 13% 24% 87% 76% > 150 24% 29% 76% 71% Roomrate 26% 40% 74% 60% <65 21% 30% 79% 70% 65-80 30% 50% 70% 50% 81-105 28% 48% 72% 52% >105 24% 33% 76% 67% Table 1.4.6: Absenteeism by star rating (in %) Absenteeism 2012 2011 2010 Total 2,9 3,2 3,9 Star rating Three stars 2,7 3,2 3,5 Four stars 2,8 3,2 4,1 Five stars 4,1 3,5 3,9 Table 1.4.7: Absenteeism by number of rooms (in %) Absenteeism 2012 2011 2010 Total 2,9 3,2 3,9 Size < 50 rooms 2,8 2,7 3,8 50-100 rooms 3,0 3,9 4,4 101-150 rooms 2,8 2,7 3,3 > 150 rooms 2,7 3,3 3,4 Hospitality Benchmark 2013 17

2 Benchmark analysis 2.1 Benchmark analysis 2012/2011/2010 The second part of the KPMG Hospitality Benchmark report consists of the benchmark analysis. Here you will find four profit and loss accounts, segmented by region, number of rooms, star rating, and to price band. With the assistance of the benchmark you can compare your results with the study results and assess how your organisation is developing relative to the market. Table 2.1 Profit and loss account by region (in %) Groningen, Friesland and Drenthe Overijssel Gelderland Utrecht and Flevoland 2012 2011 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010 Revenues Rooms 39 45 47 43 43 41 36 34 40 50 52 57 F&B 46 47 46 42 42 49 47 48 44 40 38 36 Halls 7 3 2 10 10 4 9 4 5 8 7 2 Other 8 5 5 5 5 6 8 14 11 3 3 5 Total revenue 100 100 100 100 100 100 100 100 100 100 100 100 Cost of sales (excluding personnel costs) Rooms 5 5 4 6 6 6 5 5 5 6 4 8 F&B 14 13 12 13 8 12 14 14 13 11 10 13 Other 2 3 2 3 2 2 3 3 2 1 2 3 Total cost of sales 22 21 17 22 17 19 22 22 20 18 15 24 Personnel costs (including social security charges, etc.) Rooms 12 14 6 12 9 11 12 11 10 15 14 9 F&B 19 19 5 17 15 16 18 18 15 16 13 14 Administrative & General & HR 5 4 1 4 3 4 5 4 4 5 5 3 Sales & Marketing 2 2 0 1 2 1 1 1 2 1 2 1 Property management & Maintenance 3 3 1 3 3 2 3 5 2 4 1 1 Total personnel costs 40 42 14 38 32 34 39 39 32 41 35 29 Unallocated operating costs Administrative & General 2 5 1 3 4 3 3 3 4 4 4 5 Sales & Marketing 9 2 3 3 2 3 3 2 0 3 2 4 Property management & Maintenance 5 5 7 6 5 6 5 4 8 6 6 7 Other 19 4 13 3 5 4 4 5 6 5 2 6 Total unallocated operating costs 39 17 24 15 16 17 15 14 18 17 14 21 Total costs 101 80 55 75 65 70 76 75 70 76 64 75 Revenue for allocation of overheads -1 20 45 25 35 30 24 25 30 24 36 25 18 2 Benchmark analysis

Noord-Holland Zuid-Holland Zeeland Noord-Brabant Limburg Total 2012 2011 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010 69 66 58 59 57 47 49 57 49 59 56 50 45 54 48 57 59 50 23 27 33 31 34 37 43 43 43 27 36 40 35 38 43 32 33 39 4 3 4 6 3 6 0 0 1 10 4 4 6 3 2 6 3 4 4 4 5 4 5 10 7 0 7 3 4 6 14 6 8 5 5 7 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 9 9 9 7 6 6 12 8 6 7 7 7 7 11 13 7 8 7 8 9 9 11 10 11 13 13 13 10 11 14 10 11 11 10 10 11 1 2 3 3 3 2 0 0 2 1 2 3 2 1 1 2 2 2 17 21 20 20 18 19 25 21 21 18 21 23 19 23 25 19 20 20 13 12 10 14 12 11 12 14 12 13 13 10 12 12 9 13 12 10 10 11 10 13 13 16 18 16 17 14 14 16 15 14 1 13 13 13 4 3 5 4 4 4 4 5 7 5 4 4 3 4 3 4 4 4 1 1 5 2 2 2 2 2 2 1 1 2 1 1 1 2 1 3 3 1 3 2 2 2 3 3 1 5 3 1 2 2 1 3 2 2 32 29 34 35 33 34 39 39 39 38 36 32 33 33 15 35 33 32 3 3 5 3 3 5 3 2 5 3 2 3 3 3 3 3 3 4 3 2 5 3 2 4 2 2 4 3 2 3 2 2 3 3 2 4 5 3 7 6 6 9 6 7 7 7 4 6 5 3 6 5 4 7 5 4 6 6 6 5 1 10 6 6 5 6 3 3 4 5 4 6 15 11 22 17 18 23 13 21 22 19 13 17 13 11 17 15 13 21 64 61 77 72 69 76 78 80 82 76 70 73 65 67 57 69 67 73 36 39 23 28 31 24 22 20 18 24 30 27 35 33 43 31 33 27 Hospitality Benchmark 2013 19

Table 2.2: Profit and loss account by number of rooms (in %) < 50 50-100 101-150 > 150 Total 2012 2011 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010 Revenues Rooms 51 48 48 47 51 48 56 59 51 65 65 52 57 59 51 F&B 38 44 41 39 40 40 33 32 40 25 27 35 32 33 39 Halls 5 4 3 5 3 3 8 4 3 6 3 5 6 3 3 Other 5 4 8 9 7 9 3 4 6 4 4 8 5 5 7 Total revenue 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Cost of sales (excluding personnel costs) Rooms 8 8 6 6 7 7 7 7 7 8 8 7 7 8 7 F&B 2 15 14 11 12 12 10 10 12 8 9 9 10 10 11 Other 12 2 2 2 2 3 2 1 2 2 2 2 2 2 2 Total cost of sales 22 26 22 19 21 21 19 18 21 18 19 18 19 20 20 Personnel costs (including social security charges, etc.) Rooms 13 14 11 12 12 9 13 13 10 13 12 10 13 12 10 F&B 14 16 14 16 15 15 14 13 14 11 11 11 13 13 13 Administrative & General & 5 4 1 5 4 1 4 4 1 4 4 6 4 4 3 Personnel costs Sales & Marketing 1 2 2 2 1 1 2 2 1 1 1 3 2 1 2 Property management & Maintenance 1 2 5 2 3 4 1 2 4 2 2 5 2 2 4 Total personnel costs 35 38 33 35 36 31 34 35 30 30 30 36 33 33 33 Unallocated operating costs Administrative & General 3 3 3 3 4 5 3 4 3 2 2 6 3 3 5 Sales & Marketing 3 2 3 3 2 3 3 2 4 3 2 5 3 2 4 Property management & Maintenance 6 6 9 6 5 7 5 4 5 5 3 8 5 4 7 Other 2 5 4 5 4 6 4 3 5 4 4 7 5 4 6 Total unallocated operating costs 15 16 19 18 15 21 15 14 17 14 12 26 15 13 21 Total costs 71 79 74 73 72 73 68 67 68 62 61 80 68 67 74 Income before fixed charges 29 21 26 27 28 27 32 33 32 38 39 20 32 33 26 20 2 Benchmark analysis

Table 2.3: Profit and loss account by star rating (in %) Three stars Four stars Five stars Total 2012 2011 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010 Revenues Rooms 68 69 47 55 59 51 59 49 50 57 59 51 F&B 24 25 46 33 33 36 31 37 41 32 33 39 Halls 3 3 4 7 2 5 5 8 4 6 3 4 Other 5 3 3 5 5 8 5 6 6 5 5 6 Total revenue 100 100 100 100 100 100 100 100 100 100 100 100 Cost of sales (excluding personnel costs) Rooms 7 8 6 7 8 7 8 9 7 7 8 7 F&B 7 7 13 10 10 12 11 14 8 10 10 11 Other 1 1 2 2 2 2 4 4 3 2 2 2 Total cost of sales 15 16 21 19 19 20 23 27 18 19 20 20 Personnel costs (including social security charges, etc.) Rooms 16 15 11 12 13 10 10 8 10 13 12 10 F&B 8 8 16 14 13 13 14 17 10 13 13 13 Administrative & General & 5 4 4 4 4 4 3 5 7 4 4 4 Personnel costs Sales & Marketing 1 1 2 1 2 1 3 2 9 2 1 3 Property management & Maintenance 2 2 2 1 2 1 2 2 4 1 2 2 Total personnel costs 31 30 35 33 33 29 33 34 40 33 33 33 Unallocated operating costs Administrative & General 2 2 4 3 3 5 4 3 6 3 3 5 Sales & Marketing 2 1 3 3 2 4 4 3 4 3 2 4 Property management & Maintenance 5 3 6 6 5 9 4 3 4 5 4 7 Other 5 3 5 4 5 6 8 4 5 5 4 6 Total unallocated operating costs 14 9 17 15 15 23 20 12 19 15 13 21 Total costs 61 56 74 67 67 73 76 73 78 67 67 74 Income before fixed charges 39 44 26 33 33 27 24 27 22 33 33 26 Hospitality Benchmark 2013 21

22 2 Benchmark analysis

Table 2.4: Profit and loss account by price band (in %) < 65 65-80 81-105 > 105 Total Revenues 2012 2011 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010 Rooms 47 49 48 50 58 47 58 58 49 65 62 54 57 59 50 F&B 41 42 39 39 34 41 30 33 40 26 30 36 32 33 39 Halls 8 5 5 7 3 4 4 2 2 6 4 4 6 3 4 Other 5 4 7 4 4 9 8 6 9 4 4 6 5 5 8 Total revenue 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Cost of sales (excluding personnel costs) Rooms 7 7 7 6 7 6 7 7 7 9 8 11 7 8 7 F&B 12 12 12 11 10 12 9 10 13 9 10 13 10 10 11 Other 2 2 2 2 2 2 2 1 2 2 3 3 2 2 2 Total cost of sales 20 22 21 19 20 19 18 18 22 19 21 26 19 20 20 Personnel costs (including social security charges, etc.) Rooms 16 15 10 13 14 9 12 13 10 11 11 11 13 12 10 F&B 16 15 14 15 13 12 13 13 15 11 12 12 13 13 13 Administrative & General & 5 4 3 4 5 3 4 4 4 4 4 5 4 4 4 Personnel costs Sales & Marketing 1 1 2 1 1 1 2 1 2 2 2 5 2 1 3 Property management & Maintenance 5 3 1 4 2 1 3 3 2 3 2 3 3 2 2 Total personnel costs 43 38 30 36 35 26 34 33 33 31 31 36 35 33 32 Unallocated operating costs Administrative & General 3 3 3 2 4 3 3 3 4 3 3 6 3 3 4 Sales & Marketing 2 2 2 2 2 3 3 2 4 4 2 5 3 2 4 Property management & Maintenance 7 5 4 5 4 6 5 4 9 5 3 7 5 4 7 Other 5 5 2 5 5 5 4 4 6 5 4 7 5 4 6 Total unallocated operating costs 18 16 12 14 15 17 15 14 24 17 12 26 16 13 21 Total costs 81 76 62 70 70 62 67 66 78 67 64 88 70 67 73 Income before fixed charges 19 24 38 30 30 38 33 34 22 33 36 12 30 33 27 Hospitality Benchmark 2013 23

3 Outlook for 2013-2015 In this part of our report we discuss the outlook for 2013-2015. Each year, based on our knowledge of the hotel market, we outline our vision of the future of the sector. Market development is an annually recurring topic, and this year our outlook also covers financing and the use of loyalty programmes. 3.1 Market developments In 2012, the occupancy rate and average room rate stabilised. For the first quarter of 2013, 72% of hoteliers have seen demand for rooms stabilise or decrease compared to the first quarter of 2012. In the first quarter of 2013, 75% of hoteliers had an equal or lower room rate compared to the first quarter 2012. The crisis and the low confidence of both companies and individuals in the economy are to blame for this. We also do not expect the Dutch hotel world will show any substantial improvement in occupancy rate and average room rate during the coming years. However, we do see bright spots. The cost savings initiated by hoteliers are increasingly starting to take effect. In this context, for example, there is more efficient use of staff, more effective purchasing, as well as lower or more variable leases. The lower interest rate can also lead to lower costs with refinancing. Unfortunately, many hotels are forced to postpone maintenance and investments because of poor results. This is in itself understandable, however dangerous because a downward spiral of lower quality, lower prices and lower results can then be expected. The hotels that can afford it will strike it lucky in if they now renovate and invest because they can purchase cheaper and obtain the best possible benefit when the economy recovers again. Another positive aspect is that more and more hotels are making the extra effort to increase revenues by offering new products and services or tapping into new markets. This is excellent, because the profit recovery should always specifically come from increasing the revenues. This revenue for Dutch hotels is fortunately increasing as a result of guests from those parts of the world where the economy is still doing well, such as the BRIC countries [Brazil, Russia, India and China], Turkey, and the USA. Hotels that are actively busy with social media see the positive effects of this on revenue and number of guests. Good reviews/ratings and swiftly responding to negative customer reactions are becoming increasingly more important. Most large hotels have employees that monitor the social media. The hotels that focus on conferences and training courses remain under pressure. More online training courses, cuts from industry and more training/coaching in the workplace are the main causes of this. We notice that five-star hotels and small hotels (<50 rooms) are gaining in popularity. These hotels respond to the requirement for experience and a high degree of personal attention. Particularly in the large cities, we see more and more competition coming from individuals offering rooms to tourists. On the one hand tourists choose this because it can be cheaper, but on the other because it is also more exciting and more personal. They want not only a product, the overnight stay, but also the experience, seeing the life of the local residents. Besides the growth of bed and breakfast accomodation during recent years, we are now seeing increasing popularity of organisations such as Airbnb, the US online marketplace for private homes/room rental to tourists. Research by this company shows that in 2012 there were 2,500 private individuals in Amsterdam who provided accommodation for 63,000 foreign guests, who stayed for an average of four nights. Hoteliers rightly ask the question of whether the private offering of overnight accommodation is unfair competition? After all, a hotel has to meet all the fire requirements, tax conditions and obtain permits, whereas private individuals have much fewer difficulties with these requirements and the checks on them. Also, the popularity of websites on which private individuals perform international home swaps, often plus car, is increasing. Hotel chains find it difficult to stop this trend, because standardisation, and thus experience and fewer surprises are now 24 3 Outlook for 2013-2015

inherent to the efficient management of a chain. Nevertheless, local management of a hotel can continue to try to respond to the individual wishes of its guests as well as offer more experience aspects in its hotel/city. For example, there are already Amsterdam hotels that offer a guest a one-on-one city tour with an Amsterdam resident who likes to show off his city, and thus respond to the specific interests of the guest. The expectations for the Randstad and the Amsterdam/Schiphol region remain moderately optimistic. All the major museums are open again, which is important for the leisure guests. Various travel guidebooks recommend Amsterdam because of the unique offerings of history, culture and entertainment options. To attract business guests, it is advantageous that during the next few years many large conferences are planned and that the economic activity around Amsterdam is maintained. But the increased flow of tourists and business people will indeed be able to choose from a rapidly-increasing supply of hotel rooms in and around Amsterdam. The supply of additional rooms includes both new construction projects and a long list of offices that are being converted into hotels. This additional supply of hotel rooms has a depressing effect on the average room rate and the occupancy rate. However, every supply eventually creates its own demand. We are confident that the market will be able to absorb this extra capacity properly in the longer term. The trend that hotel bookings will increasingly come through online travel agencies and auction sites will not stop during the coming years. For example, no less than 35% of the respondents to our survey stated that the hotel would no longer have existed without online travel agencies. On the one hand, the online travel agents generate additional revenue because those websites bring in extra guests and increase the occupancy rate of the hotel, and on the other, however, this often happens at lower prices plus additional commission costs that must be paid to the intermediaries. Because there are many good websites that show clearly what last-minute rooms are still available, more and more tourists dare to travel to cities without having made a booking in advance. Bookings are therefore made increasingly later, with the danger that hotels feel the need to offer last-minute rooms at lower prices. This means the hotel loses some of its pre-financing to cover the prepaid rooms. 3.2 Financing and refinancing The crisis will end for some independent hotels in a takeover by a capital rich hotel chain, or entering into a franchise/ management contract, or even into bankruptcy. In particular, the financing or refinancing and the business succession of smaller hotels outside the major cities will become increasingly difficult. This market is also facing ever increasing competition from private individuals who rent rooms to tourists. Banks are often reluctant to invest in the cyclically sensitive hotel market. Funding now represents the best chance of success if the hotel is located in a big city, there is affiliation with a major hotel chain, and if more than 40% equity is contributed. Internationally, we have already been seeing for some years that private equity parties play an increasingly important role in financing or refinancing of large hotels. Due to this difficult financing or refinancing, we also see more and more hotel chains that maintain an asset-light strategy, after which they do not own the hotel but do enter into a franchise or management contract with the owner of the bricks and mortar. Existing hotels are also regularly sold and leased back to relieve the burden of debt. The risk of owning property is thus mitigated and the hotelier can focus on its core business, offering accommodation to guests. In addition, the sale of property creates the opportunity to expand the liquidity, so there is once more room for investments. It is also an interesting structure for banks. The solvency of the company can increase and operational ratios can be improved by eliminating the often high depreciation costs and interest expenses. Are there also disadvantages for the hotelier? One of the drawbacks mentioned most often will be the share of control. The owner will have a say in the policy and will ask a substantial fee that is in line with the purchase of the property. The investor will ask for reports and will set targets for the company. Hospitality Benchmark 2013 25

We expect to see an upward trend in the coming years in the number of property transactions. More and more investors see the benefits of hotel property in times of economic downturn. Hoteliers have proved to be reliable partners. Hotels have generally been located in the same place for many years already and have built up a good reputation in the region and even beyond it. This reliability does not go unnoticed. The Travel, Leisure & Tourism Group would like to use its knowledge to guide you in finding a suitable partner for the sale of your property. 3.3 Loyalty programmes Unfortunately it happens regularly: you have booked a hotel, part of a large chain, and when checking in the reception clerk asks: Are you a member of our loyalty programme? How can the reception clerk not know this? How well does the hotelier know his guest? How effective are loyalty programs actually? Do they create loyal customers? The benefits of a loyalty program seem clear: because points are saved, the programme participants book more frequently with the same hotel group. The number of participants in loyalty programmes is therefore considerable: every major hotel group has its own programme. But how active are these participants? The loyalty programmes reward guests who book frequently within a specific period. However, competing hotel chains often provide compensation for the accumulated number of points if the guest switches, which makes switching interesting. The loyalty programmes also rarely provide followup. You will not be missed as a loyal participant and that creates little loyalty. In addition, it also applies that there is no incentive for a participant in the upper class of the loyalty programme to continue to book with the hotel group until the new measurement period has commenced. The participant will always be at the top of the number of points, and there is nothing more to be obtained. Given that each hotel group has its strength in a different region, it could be beneficial for a participant to switch to the loyalty programme of another hotel group. This would therefore lead to rational behaviour. The participant will try to maximise the number of free nights, but the participant will not be loyal as such to a single hotel group. Online booking agencies are now also developing their own loyalty programmes. This may pose a threat to the existing loyalty programmes of hotel groups. After all, the selection is a lot bigger, there are several hotel brands to choose from and the guest has the guarantee that he will pay the lowest price. Loyalty programmes that offer nothing more than just collecting points are therefore increasingly losing their effective ness. How could loyalty programmes then actually lead to loyal customers? What you actually want to achieve as hotel group is that the participant in question is loyal to the brand, and also recommends the hotel brand to friends and shares positive experiences on review sites. After all, today s consumers no longer rely on traditional advertising when it comes to decisions on purchasing. We rely more and more on our social network and review communities and want them to know from them whether a product is good. This is no different in the hotel and travel industry, which explains the growth of review sites. For example, the appreciation of hotel comparison sites is heavily dependent on the choice and purchase. To create truly loyal customers, hotels would have to focus more on improving their management of social media and their community. The existing loyalty programmes must be better integrated with social media and direct marketing. Data and technology must be better deployed and utilised to obtain more insight into the customers. An example could be that the loyal guest is recognised in the row, and then receives a message on his/her smartphone that can be used to check in. However, communication with the guest can also be much more personal. Often the hotels have huge amounts of data available on the travel patterns and preferences of their guests, but these data are very limited or not used to make individual offers to the guest, for example, concerning specific dates or preferences based on past purchases. 26 3 Outlook for 2013-2015

Hotel chains that succeed in making their guests into real promoters of their brand are the winners of the future! KPMG can advise you on the use of social media and with converting data into value for your company. Would you like to read more? Visit www.kpmg.nl/ extreme-digitalisering. Hospitality Benchmark 2013 27

28 Explanation of terms used

Explanation of terms used Room revenue This category comprises the sales revenue from guest accommodation. It does not include any sales revenue from the use of available services. F&B revenue This category comprises the sales revenue from food and beverages sold to guests in the restaurant/café or via room service. It does not include revenue from staff purchases. Other revenue This category comprises parking charges, exchange rate gains, and revenue from telephone, laundry and dry cleaning services. Occupancy rate The occupancy rate is calculated by dividing the number of rooms actually occupied during the year by the number of rooms available throughout the year. Average room rate The average room rate is calculated by dividing the room revenue by the total number of rooms occupied during the year. RevPAR The RevPAR (revenue per available room) is calculated by dividing the room revenue by the total number of rooms available during the year. Total revenue per room The total revenue per room is calculated by dividing the total revenue by the total number of rooms. Personnel costs This category comprises the payroll costs of the staff at the department in question. These costs include the statutory social insurance contributions, holiday pay, pension contributions and other related costs. Cost of sales This category comprises the purchase cost of the goods or services sold by the department in question. It does not include the purchase cost of goods or services sold to employees. Unallocated operating costs This category includes other costs such as energy costs, maintenance expenditure, travel expenses and consultancy fees. Income before fixed charges This is calculated by deducting the cost of sales, personnel costs and unallocated operating costs from the total revenue. Hospitality Benchmark 2013 29

About KPMG in the Netherlands KPMG offers services in the field of audit, tax and advisory. We work for a wide range of clients: major domestic and international companies, medium-sized enterprises, non-profit organisations and government institutions. The complicated problems faced by our clients require a multidisciplinary approach. Our professionals excel in their own specialist fields while, at the same time, working together to offer added value that enables our clients to flourish in their own environment. In doing so, we draw from a rich source of knowledge and experience gained worldwide at a broad range of organisations and markets. Travel, Leisure & Tourism (TLT) Group The KPMG Travel, Leisure & Tourism Group has a wealth of expertise with respect to hotels, conference centres, bungalow parks, travel agents, restaurant chains and catering companies, and understands not just the world of the figures, but also what goes on behind the figures. It is a multi-disciplinary team of professionals with experience in the industry. Many members of our Group also have qualifications in hotel management. Below you will find specific examples of how the KPMG Travel, Leisure & Tourism Group can be of service to you. Audit of the financial statements You can engage KPMG to audit your financial statements, to perform review engagements and to compile your financial statements. Thanks to our knowledge of the hotel sector, we can act as a professional sparring partner. Benchmark quick scan KPMG compares your figures to the benchmark figures and analyses the differences. KPMG can offer you advice regarding the key differences identified in order to gain better insight into your hotel s performance. Internal control smart card How well do you know the processes within your company, and to what extent is your staff aware of the internal controls within the processes? KPMG uses handy smartcards to help identify the processes and internal controls at your company. Optimising the financial organisation We review your financial organisation with you. We identify the strengths and points for improvement, on the basis of which we draft an action plan. The aspects we assess include the quality of the reporting processes, management s and staff members competencies, and efficiency (such as the integration of financial systems). Assessing websites KPMG has a staff member with a hotel management qualification and a degree in Information Management, who is specialised in online developments in the hotel industry and changes in the distribution network. We can help you improve your own website in order to generate more bookings via this channel. We also advise you on how use various booking sites more effectively. Improving the budgeting and forecasting process Many companies see the planningand-control cycle as a difficult task. KPMG supports the development of a process that is efficient, in line with your operating management, and allows you to define clear targets. Thanks to our multidisciplinary teams we can use IT solutions to facilitate this. 30 About KPMG in the Netherlands

Operating capital management Less operating capital means more room to invest in existing or new hotels. KPMG reviews your operating processes from the perspective of cash flow, providing specific suggestions on reducing the operating capital requirement. This could involve, for example, improving payment terms with suppliers, reducing stocks by improving the ordering process, etc. Cost optimisation KPMG can offer you advice on reducing your costs in the short term and help you raise the cost awareness within your organisation. We prioritise savings opportunities and help you implement improvements. Speeding up and improving reporting processes Companies are increasingly faced with situations where the quality require ments for figures conflict with transparency requirements. This puts a lot of pressure on the reporting processes. KPMG carefully analyses the preparation of the reports. We identify bottlenecks and determine which information is absolutely essential. Sustainability Climate change compels companies to think about the way in which they do business. In the long term, hotel chains need to develop strategies to manage their impact on the environment (their so-called carbon footprint ). KPMG can help you calculate your carbon footprint and provides insight into how it can be managed and reduced. Fraud How effectively is your company protected against fraud? KPMG can help you prevent fraud and draft a plan of action if fraud is discovered. VAT/corporation tax/wage tax scan How well informed are your financial accounts department and HR department about tax legislation and regulations? Find out with the aid of our tax scans. Feasibility studies What is the feasibility of your plan to open a new hotel, to invest in a SPA? KPMG can carry out a feasibility study for you. Expanding into new and emerging markets KPMG can help you identify and act on opportunities in new and emerging markets. Assistance with mergers, acquisitions and disposals Are you looking for a buyer for your company because you have no business successor or would like to realise your economic interest, or due to other (external) developments? Or have you identified opportunities for expanding your company? KPMG can assist you by ensuring optimal management of the process, with minimal disruption to your daily operations and the best possible result. Advice on acquisitions and disposals KPMG can help you analyse possible acquisition candidates with the aid of industry experts, who identify the risks and opportunities that may arise if you acquire property from a real estate investor or real estate portfolio. KPMG can assist you in due diligence investigations; as soon as the parties are in contact, we assist our clients, both in their domestic market and abroad, to ensure a detailed quantification of the potential risks arising from a transaction. KPMG offers advice on disposals; our broad range of advisory services includes assisting management during the disposal process, preparing vendor due diligence reports, and designing data rooms. Financing re-structuring KPMG provides advice on structuring financing; we structure property financing for both property-specific financing as well as portfolio and capital markets financing. Information security scan KPMG assists you in designing a practical security policy that is tailored to your organisation s objectives and strategic priorities and enjoys internal support. Inadequate security awareness and behaviour within your organisation may give rise to various risks, including the risk of fraud, unauthorised access, loss Hospitality Benchmark 2013 31

of personal or sensitive business information, and reputational damage. When performing our scan, we can use ethical hacking, which involves IT specialists investigating whether your hotel s IT systems and data are secure. Business succession KPMG can support your business succession. Often, the Managing Director and Majority Shareholder [directeur-grootaandeelhouder (DGA)] will have only very limited experience with business succession and/or disposal processes. Given the complexity of the many aspects involved, the DGA needs professional support to assist with the entire process, which takes an average of three to so seven years. KPMG has the required business, legal and tax expertise to provide optimal support to the DGA during the entire process of selling the company or transferring it to a successor. Financing requests KPMG supports companies who want to request financing. If for whatever reason your company needs financing, KPMG can provide support and assistance, helping you draw up a financing request. Business plans KPMG actively assists hoteliers in preparing, redesigning or adjusting a business plan for their company. We coordinate the process, act as a sounding board and provide support by utilising our KPMG tools. The main KPMG tools are the business planning workbook, workshops and our VisionPlanner software package, which allows you to systematically draw up a business plan and the accompanying financial forecasts. Selecting your IT packages KPMG assists you with the selection of the IT packages you require. We help you chose from a range of IT packages for your Enterprise Resource Planning, Human Resource Management, Customer Relationship Management, and Consolidation and Reporting. Supporting IT implementations KPMG assists you in implementing IT packages, supporting the various components, such as tests, conversions and internal controls. If your organisation wants to obtain assurance regarding the contents of an IT implementation and the progress made on it, we can provide quality assurance regarding the project management. 32 About KPMG in the Netherlands

Contact KPMG Accountants N.V. Laan van Langerhuize 1 1186 DS Amstelveen The Netherlands Postbus 74555 1070 DC Amsterdam The Netherlands Jos Sweers Travel, Leisure & Tourism T: +31 (0)20 656 8081 E: sweers.jos@kpmg.nl Ilse de Graaff Travel, Leisure & Tourism T: +31 (0)20 656 8774 E: degraaff.ilse@kpmg.nl www.kpmg.nl 2013 KPMG Accountants N.V., registered in the Netherlands with company number 33263683, is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms associated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. KPMG, the KPMG logo and cutting through complexity are registered trademarks of KPMG International. The information contained in this document is of a general nature and is not tailored to the specific circumstances of a particular person or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate on the date it is received or that it will continue to be accurate in the future. We therefore advise you not take any decisions on the basis of this information other than on the basis of advice from a professional following a thorough review of the relevant situation. Subject to the above and observations noted in the report, the report has been approved on risk aspects.